The Hidden Wealth of Nations: The Scourge of Tax Havens

Gabriel Zucman

Book cover

Zucman is one of the students of Thomas Piketty, and his approach is appealing in a similar way–compile some data that no one has used before (or at least looked at in the same way), and derive some conclusions that are, to a first approximation, model-free. In this case, Zucman basically totes up the aggregate assets and liabilities reported by each country in the world, and finds a hole in the assets side (which, by accounting identity, should equal the liabilities side) and argues persuasively that this represents offshore wealth hidden from tax authorities.

The book reads like a paper expanded into a book, but unlike many such cases, I thought it worked. Among other things, it remains short–it didn’t feel like Zucman was adding unnecessary padding just to make it “book length.” It was interesting to learn about the history of tax havens in the 20th century–basically the history of Switzerland, how post-WWI taxes drove the emergence of tax havens, and how the data put the lie to Switzerland’s claim that they were helping people hide their wealth from fascists.

Zucman’s analysis of tax havens for personal wealth was quite compelling, and he lays out some very plausible policy prescriptions for addressing the problem. The one part of the book I found weaker was the brief discussion of corporate tax evasion by offshoring wealth, which is a much larger problem for America than individual tax evasion. It felt like Zucman was including it by necessity and hadn’t put in the same amount of work as on the topic of individuals. I would have preferred if he kept the book more focused and saved that for its own book!

My Goodreads rating: 4 stars